BACKGROUND You are opening a new restaurant and need to determine the selling price for a dish you plan to offer as a featured item on your menu. Use the information provided below to calculate the menu item price using various pricing methods, then analyze your results. Refer to Textbook Pages 78-81 for calculations. ASSIGNMENT GUIDELINES o Assume the following data has been obtained from your operation: o Menu Item Food Cost = $5.70 o Food Costs = $35,000 Non-Food Costs = $30,000 o Required Profit/Target Profit = $7,500 Expected Number of Customers = 12,000 o Labor Cost = $18,500 Desired Prime Cost Percentage = 58% = .58 Calculate the menu selling price using each of the following pricing methods: o Contribution Margin Method o Ratio Pricing Method o Simple Prime Cost Method Answer the follow-up questions below. Be sure to include the following in your submission: 1. Formula & Selling Price Calculated Using the Contribution Margin Method 2. Formula & Selling Price Calculated Using the Ratio Pricing Method 3. Formula & Selling Price Calculated Using the Simple Prime Cost Method 4. Based on your calculations, how much would you actually charge for this item on your menu? 5. Which pricing method would you use to create the rest of your menu? Why? BACKGROUND You are opening a new restaurant and need to determine the selling price for a dish you plan to offer as a featured item on your menu. Use the information provided below to calculate the menu item price using various pricing methods, then analyze your results. Refer to Textbook Pages 78-81 for calculations. ASSIGNMENT GUIDELINES o Assume the following data has been obtained from your operation: o Menu Item Food Cost = $5.70 o Food Costs = $35,000 Non-Food Costs = $30,000 o Required Profit/Target Profit = $7,500 Expected Number of Customers = 12,000 o Labor Cost = $18,500 Desired Prime Cost Percentage = 58% = .58 Calculate the menu selling price using each of the following pricing methods: o Contribution Margin Method o Ratio Pricing Method o Simple Prime Cost Method Answer the follow-up questions below. Be sure to include the following in your submission: 1. Formula & Selling Price Calculated Using the Contribution Margin Method 2. Formula & Selling Price Calculated Using the Ratio Pricing Method 3. Formula & Selling Price Calculated Using the Simple Prime Cost Method 4. Based on your calculations, how much would you actually charge for this item on your menu? 5. Which pricing method would you use to create the rest of your menu? Why
